Taxes are the main sources of replenishment of the budget of any state [1]. The tax system of Montenegro is slightly different from the taxation schemes in other European countries. It refers to the classic variations of the system of fees and payments that are common in European countries. Tax legislation is quite loyal to the local population, and this applies to both individuals and legal entities.
Features of Taxation in Montenegro Low tax rates applied to deductions from wages and profits of enterprises provide a powerful boost to the economic growth and prosperity of the country. The government of Montenegro strives for further development of the state, therefore it makes every effort to optimize taxation for its own citizens, as well as for non-residents. As of 2019, Montenegro is confidently heading towards pan-European economic standards. The classical taxation scheme is used in this regard, but interest rates remain quite low. Let's look at the structure of the Montenegrin system of fees and payments in more detail.
The calculation and tax liability related to VAT payment is regulated by the VAT Law adopted in 2002. According to the provisions of this document, the sale of all goods and services, the construction of new real estate, as well as the import of goods are taxed at the rate of 17%. An undervalued interest rate is applied in the following situations:
• sales and imports of socially significant goods and services are subject to 17% VAT;
• sales and imports of goods and services of social significance that are not subject to VAT deduction
Also, goods that are in temporary and transit import are exempt from this type of tax, but only if they are exempt from customs duty. VAT is not paid on the sale of goods with special exemptions and services related to the import of the listed groups of goods, and in many other cases;
• import and sale of goods and services that are taxed at a zero interest rate. Goods exporting abroad are also exempt of VAT.